Mersana Therapeutics, Inc. (NASDAQ:MRSN) Q4 2023 Earnings Call Transcript
Mersana Therapeutics, Inc. (NASDAQ:MRSN) Q4 2023 Earnings Call Transcript February 28, 2024
Mersana Therapeutics, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Mersana Therapeutics Fourth Quarter 2023 Conference Call and Webcast. Currently, all participants are in listen-only mode. There will be a question-and-answer session, at the end of this call. [Operator Instructions]. Please note, this call is being recorded. I would now like to turn the call over to Jason Fredette, Senior Vice President, Investor Relations and Corporate Communications.
Jason Fredette: Thank you, operator, and good morning, everyone. Before we begin, please note that this call will contain forward-looking statements within the meaning of Federal Securities Laws. These statements may include, but are not limited to those relating to our platforms, product candidates, business strategy, clinical trial execution and results, business development efforts and cash runway. Each of these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. These risks and uncertainties are discussed in our quarterly report on Form 10-Q filed with the Securities and Exchange Commission on November 7, 2023, and in subsequent SEC filings.
Our filings are available at sec.gov and on our website, mersana.com. Except as required by law, we assume no obligation to update forward-looking statements publicly even if new information, becomes available in the future. On the call today, we have Mersana's President and Chief Executive Officer, Dr. Marty Huber, and our Chief Operating Officer and Chief Financial Officer, Brian DeSchuytner. With that, let me turn the call over to Marty, to begin our discussion.
Martin Huber: Thank you, Jason, and good morning everyone. It's great to be speaking with you again. Let's start today's call off, with a brief description of our high-level aim here at Mersana. Although ADCs, have firmly established a position at the forefront of oncology, there are significant platform, and payload limitations that we believe, are preventing this therapeutic class from realizing its full potential. At Mersana, we're focused on bringing forward innovations, to address these limitations, to meaningfully improve the efficacy, and safety of ADCs. Our goals are, first, to minimize dose-limiting platform toxicities. We believe the achievement of this goal could allow us to maximize the monotherapy potential of cytotoxic ADCs and also allow them to be used effectively in combination with other standard of care treatments, something that simply isn't possible with many of today's ADCs. Second, we aim to avoid resistance mechanisms that appear, to be hampering certain ADCs. And third, we're striving to extend the field well beyond cytotoxics, and establish an entirely new class of ADC therapies that, elicit a targeted innate immune response to combat cancer.
With that as a backdrop, let's turn our attention to the progress, we're making in accomplishing these objectives. And let's begin with our proprietary, auristatin payload that's being used in our next generation cytotoxic ADC platform, Dolasynthen. When we developed this payload, one of our core objectives was to avoid the dose-limiting neutropenia and peripheral neuropathy that is reported with ADCs based on vcMMAE platform and other first-generation ADC platforms. Our payload has controlled bystander effect, meaning that it initially is membrane permeable and capable of bystander killing. However, it has also been designed to be enzymatically converted to an active metabolite that is much less membrane permeable, resulting in its accumulation in the tumor and avoid of off-target toxicity.
While we view our payload as a core differentiator and advantage. The same can be said for the platform we're using to deliver that payload, Dolasynthen. We have presented extensive preclinical data in the past demonstrating important advantages for Dolasynthen ADCs against ADCs produced using our own first-generation platform, Dolaflexin, and other platforms like vcMMAE. 2024 provides us with the opportunity to begin presenting the clinical data. Next week in Barcelona at the European Society of Gynecological Oncology, otherwise known as ESGO, clinical data will be presented for two discontinued product candidates, UpRi and XMT-1592. Both of these candidates utilize the same NaPi2b antibody and the same proprietary payload with controlled bystander effect.
However, UpRi was developed using Dolaflexin and 1592 was developed with Dolasynthen. We believe these clinical data help to affirm that the severe neutropenia, peripheral neuropathy and ocular toxicity that is frequently observed in trials of ADCs based on other platforms and payloads are uncommon with our payload. We also believe they clearly show that Dolasynthen, further reduces platform toxicities, compared with Dolaflexin. Following these presentations in mid-2024, we plan to share our initial clinical data for XMT-1660, our B7-H4 targeting Dolasynthen ADC. We continue to be pleased, with the progress we're making in our Phase 1 trial of validating the safety and tolerability of XMT-1660 as a single-agent in patients with solid tumors, including triple negative and estrogen receptor positive breast cancer, as well as ovarian and endometrial cancers.
The dose escalation portion of the trial is ongoing. In fact, we just recently escalated to a dose of 59 milligrams per meter squared, which is the highest dose that we have investigated clinically with Dolasynthen ADC. A maximum tolerated dose for XMT-1660 still has not been established. In addition, the continuing escalating dose, we are also continuing to enroll patients in backfill cohorts, to optimize dose and schedule. As is typical for Phase 1, we're enrolling a heavily-pretreated patient population. Today, single-agent chemotherapy is the standard-of-care for these types of patients, and their prognosis is exceedingly poor. For instance, the objective response rate in late-stage triple-negative breast cancer, is estimated to be approximately 5% or less, with a duration of response that is less than four months.
Today, most breast cancer patients here in the U.S. are receiving in HER2 and TRODELVY early in their treatment. An increasing amount of data, is emerging that shows patients, are developing resistance following their first TOPO1-ADC treatment. These factors are presenting an urgent unmet need, for new ADCs with alternative payloads that, do not share these resistance mechanisms. We are enrolling many patients who have previously received at least one, of these TOPO ADCs in our Phase 1 clinical trial. And we're looking forward, to sharing initial data midyear, so we can begin to clinically characterize, XMT-1660's efficacy and safety profile. Now while we're very excited about XMT-1660 and Dolasynthen, we believe IO may be the next significant frontier for ADCs. Our immunosystem platform is designed to harness the power of STING and overcome the historic limitations of free systemic STING agonists and intratumoral injections.
This platform has the potential to deliver a targeted and impactful 1-2 punch by activating STING in a target-dependent manner in tumor cells and in tumorresident myeloid and dendritic cells, while also minimizing the risk of systemic exposure. XMT-2056 is our lead Immunosynthen ADC. We're currently in the process of restarting our Phase 1 trial of this HER2 targeting ADC following a list of the clinical holds on this trial by the FDA in the fourth quarter of 2023. In Phase 1, we plan to enroll patients with a range of different HER2-positive tumors, including breast, gastric, colorectal and non-small cell lung cancer, and we're looking forward to advancing dose escalation in 2024. In addition to our independent programs, over the past two years, we also have entered into collaboration agreements, with Johnson & Johnson, Merck KGaA and GSK.
We remain very much engaged with these companies, as we seek to maximize, the potential of our ADC platforms, and product candidates. So in summary, Mersana entered 2024 with energy and excitement. We have two differentiated ADC platforms, platforms that we think could address, significant limitations for today's ADCs. We also have two differentiated clinical-stage assets and upcoming data readout on XMT-1660, and a strong balance sheet. On this latter point, let me turn the call over to our Chief Operating and Financial Officer, Brian DeSchuytner to share more detail.
Brian DeSchuytner: Thank you, Marty. Let's begin with the financial highlights for the fourth quarter of 2023. We ended the year with approximately $209 million in cash, cash equivalents and marketable securities. Net cash used in operating activities, was approximately $32 million for the fourth quarter of 2023, which is down significantly from prior quarters, thanks to our restructuring and UpRi wind-down efforts. From a cash expenditure standpoint, we expect to continue realizing benefits, from these efforts in 2024. As a result, our capital resources, are expected to be sufficient, to support our current operating plan commitments into 2026. Please note that our cash runway guidance, does not assume any potential milestone payments, from our current collaborations, or proceeds that we may realize, from future collaborations.
Turning to the income statement. Collaboration revenue for the fourth quarter of 2023 was $10.7 million, compared to $14.7 million, for the same period in 2022. The year-over-year change, was primarily related to the timing of research activities, for the Johnson & Johnson collaboration and achievement of a Johnson & Johnson early development milestone in the fourth quarter of 2022. Research and development expenses for the fourth quarter of 2023 were $21.5 million, compared to $45.7 million, for the same period in 2022, approximately $2.2 million in non-cash stock-based compensation expenses, and $3.7 million of external costs, related to our UpRi wind-down efforts were included in the R&D line in the most recent quarter. The year-over-year decline in R&D was primarily related to reduced, manufacturing and clinical costs, related to UpRi and XMT-2056, and reduced employee compensation costs, partially offset, by increased clinical costs, related to XMT-1660.
General and administrative expenses for the fourth quarter of 2023, were $10.1 million, compared to $14.8 million, during the same period in 2022. Approximately $1.9 million in non-cash stock-based compensation expenses, were included in G&A for the most recent quarter. The year-over-year decline in G&A expenses, was primarily related, to reduced consulting and professional fees, and reduced employee compensation as a result of the restructuring plan, we announced in July 2023. Mersana's net loss for the fourth quarter of 2023 was $19.5 million, compared to a net loss of $44.9 million, for the same period in 2022. That concludes our business update. Operator, would you please open the call to questions from the audience.
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